Bond rating shows why Wall Street loves CPUC

Fitch lauds regulator as it gives SDG&E bonds good rating

Fitch Ratings has given an AA-minus rating to the proposed San Diego Gas & Electric (SDG&E) $450 million issue of 3.6% first mortgage bonds due 2023.

Fitch positively gushes over "the constructive regulatory environment" -- a euphemistic way of saying that the California Public Utilities Commission (CPUC) is more interested in utilities' profits than it is in seeing customers get reasonable rates, which is its mission. (For decades, SDG&E has generally had the highest electricity rates in the nation.)

In May of this year, the CPUC granted a 7.4% jump in SDG&E's revenue requirement for 2012 over 2011. Fitch says that kind of boost is good for SDG&E. Fitch is also happy that the CPUC continues to let SDG&E use the so-called "Z-Factor mechanism" that permits the utility to recover costs from unexpected and uncontrollable events.

Fitch is concerned about costs of the closing of the San Onofre nuclear facility. "However, Fitch believes that a reasonable amount of investments and costs will be recovered," says the regulator.

Comments

CPUC and utilities are just revolving doors and back scratching. Jessie J. Knight, who is chairman and chief executive officer of SDG&E, served as commissioner for the California Public Utilities Commission (CPUC) from 1993 to 1999.